Feb. 7 (Bloomberg) -- Two managing directors were among
five employees Deutsche Bank AG suspended in Frankfurt this week
over suspected manipulation of interest rates, according to two
people with knowledge of the matter.

Two directors and a vice president, who were also
responsible for submitting euro interbank offered rates, were
the other staff suspended, according to the people, who asked
not to be identified because they’re not authorized to speak
publicly on the matter. The firm replaced them with colleagues
based in London to ensure continuity for its clients, said one
of the people, who declined to name them.

Regulators from Canada to Switzerland are investigating
whether more than a dozen banks, including Deutsche Bank,
colluded to rig lending rates. Royal Bank of Scotland Group Plc,
Britain’s biggest publicly owned lender, was fined about $612
million by U.S. and U.K. authorities yesterday after 21 of the
bank’s employees were found to be involved in wrongdoing.

A spokesman for Deutsche Bank, Europe’s biggest bank by
assets, declined to comment on the identity or responsibilities
of any staff it has suspended. The lender will fire or suspend
staff found to have acted inappropriately, he said in an e-mailed statement.

Deutsche Bank employed 9,094 full-time front-office staff
at its investment banking unit at the end of 2012, company
filings show.

Co-Chief Executive Officer Anshu Jain was head of the
investment bank at the time of the alleged rate-rigging and said
last month that the scandal “sickens” him. Bank CEOs discussed
a global settlement of the matter at the World Economic Forum in
Davos last month, he said last week.

Staff Misconduct

The firm said in July that an internal investigation of
interbank rates found misconduct by individual employees though
no wrongdoing by current or former members of the board.
Deutsche Bank dismissed two traders at the end of 2011 for
suspected manipulation of the rates.

Deutsche Bank lost 0.7 percent to 36.94 euros at 2:57 p.m.
in Frankfurt, heading for the first weekly fall since Jan. 18.

The five individuals suspended this week had contact with
at least one of the two dismissed traders, the people familiar
said today.

Euribor is derived from a survey of banks asking how much
it costs them to borrow from one another in euros for periods
from overnight to one year. About 241 trillion euros ($327
trillion) of interest rate swaps are tied to three-month Euribor
alone.

Timetable

The bank probably won’t resolve all issues pertaining to
alleged manipulation of borrowing rates this year, Stephan
Leithner, the company’s management board member for legal
affairs, said last week.

Like the London interbank offered rate, Euribor is based on
estimates rather than actual trade data, leaving the rate
vulnerable to manipulation. The 39 banks that contribute to the
rate outnumber the 18 that help set dollar Libor, making it
harder for individual traders to rig it.

Deutsche Bank, which says it is cooperating with the
authorities in their probes, is also the subject of civil
litigation related to alleged rate-rigging, according to the
company.

Banks are the target of legal proceedings as regulators
probe firms over claims they used interbank rates to
artificially understate their cost of borrowing or profited from
bets on interest-rate swaps.

The RBS settlement made yesterday is the third in the probe
of global interest rate benchmarks. Barclays Plc agreed to pay
290 million pounds ($456 million) in June while UBS AG settled
manipulation and criminal charges with regulators for 1.4
billion Swiss francs ($1.5 billion) in December.

At seven, the number of Deutsche Bank staff who may have
sought to rig rates is so far lower than at the three banks that
have settled. Barclays disciplined 13 employees and dismissed
five, Rich Ricci, head of corporate and investment banking, told
British lawmakers on Nov. 28. About 40 individuals at UBS,
including 11 managers, sought to manipulate the rates. At least
two further managers and five senior managers were aware of the
practice, Britain’s Financial Services Authority has said.